Don’t talk about Innovation, talk about Growth.
What CEOs, management teams and shareholders care about is growth—revenue growth, greater user adoption, increased market share, bigger margins, etc. So the first step for any corporate “innovation” organization is to tie the word, “innovation,” to the more tangible concept of “growth.”
So says David Butler, VP of Innovation and Entrepreneurship at The Coca-Cola Company, in this great post on Steve Blank’s blog. In it David discusses how Coca-Cola, a company with more than 500 brands, 4000 products, and market cap around $170B organizes for disruptive innovation.
David begins by acknowledging existing corporations are good at growing through optimization of the current business model (sustaining innovation), but not so good at discovering new business models (disruptive innovation).
Steve Blank et al had originally described 8 principles of corporate innovation, and David was inspired by those – and added a couple more. You should read the whole blog post for further explanation, but here they are in summary:
- 21st century corporate survival requires companies to continually create a new set of businesses by inventing new business models.
- Most of these new businesses need to be created outside of the existing business units.
- The exact form of the new business models is not known at the beginning.
- Companies will have to maintain a portfolio of new business model initiatives, not unlike a venture capital firm, and they will have to accept that maybe only 1 out 10 initiatives might succeed.
- To develop this new portfolio, companies need to provide a stable innovation funding mechanism for new business creation, one that is simply thought of as a cost of doing business.
- Many of the operating divisions can and should provide resources to the new businesses inside the company.
- We need a new organizational structure to manage the creation of new businesses and to coordinate the sharing of business model resources.
- Some of these new businesses might become new resources to the existing operating units in the company or they could grow into becoming the new profit generating business units of the company’s future.
- In building capability, the company should look for “starters,” not “scalers.”
- But it’s not only about creating new revenue streams—creating new behaviors across the company’s culture is key.
- Finding the balance between transparency and opacity is critical.
- Nobody, no matter how smart they are, can do this alone.
One thing that I noticed in the blog post is the use of the term starter (vs scaler) when describing the type of people required for disruptive innovation:
Starters have a completely different mindset and skills than scalers have. We found we needed to hire expert starters—people who knew how to bootstrap, build MVPs, find a free or very low-cost way of testing a hypothesis, pitch, pivot, etc.
I must have read the post 5 times over the past two weeks and each time I found something new that I can apply as leader of Indeed Labs. Hope you find it useful too.
p.s. Indeed Labs is seeking starters to help power disruptive growth. Together we can help more people get jobs. Get in touch.